People looking to optimize their procurement processes sometimes turn to artificial intelligence (AI). This option is not yet widespread, but it’s becoming more common, especially as decision-makers explore new technology investments. Here are some things for individuals to keep in mind before and during their use of AI in procurement. 

Know That AI Does Not Replace Human Input and Expertise 

Artificial intelligence is a subject with much hype surrounding it. The excitement and buzz are not wholly unwarranted. When used well, the technology can change business processes and results. However, people must remember that even the most advanced AI cannot and should not replace human judgment and knowledge. 

The best approaches involve AI supporting human input and helping them make better, faster decisions. Decision-makers mistakenly believing AI can work unattended without ongoing supervision from humans will almost certainly end up disappointed due to unrealistic expectations. 

A good starting point is to consider any areas of procurement that need improvement due to a high probability of errors and inefficiencies. Taking a closer look at those shortcomings can help people understand what causes the issues and how AI might help resolve them. 

Moreover, it’s helpful for people to designate individuals or teams who will oversee the AI deployment process and solve issues that arise. Carefully planned tech implementations are more likely to proceed with fewer problems, but people should still expect a few surprises. Having a point person or team to solve those mishaps will prevent the matter from getting out of hand. 

Work With Experienced Service Providers

People at many organizations are still relatively new to using AI in procurement or for any other reason. That’s why it’s smart for them to find and hire companies or individuals with the experience to guide them through the project from start to finish. It’s ideal if these selected service providers have direct expertise in applying AI to similar use cases or at least have worked with other clients with procurement needs. 

In one case, the U.S. Department of Health and Human Services (HHS) worked with an external consultant as part of a larger procurement improvement process. The service provider combined microservices and AI to meet the department’s goals. An AI algorithm enabled the department to compare and contrast previous purchases. It analyzed the content of more than 2 million current contracts and assessed 5-7 billion words. 

Since the AI used language directly from existing contracts, it allowed procurement professionals to more effectively enter into new agreements with suppliers or to extend current partnerships. 

The tool’s design and functionality kept user-friendliness at the center. People interacting with it don’t need to know the exact terms to search for. Instead, they go through a guided process that helps them find the most relevant information quickly and easily. 

This example shows why it often makes sense to seek providers with the expertise to create solutions that fit specific needs. Finding a company with the right experience often speeds the development process and improves the chances of the AI product working as expected. 

Agree on the Primary Objectives 

People should not apply AI in procurement solely because they know competitors already have. Instead, they must develop several concrete reasons why they want to use artificial intelligence and what they’ll achieve in the best-case scenarios. 

One way to do that is to figure out how AI fits in with a company’s main business goals, whether those milestones occur in the short or long term. All organizations have specific priorities, but sustainability is an issue coming to the forefront more often lately. That’s true in terms of procurement and throughout the wider supply chain. For example, AI might identify suppliers with the lowest environmental impacts or those with less waste than competitors. 

It’s not always easy to zoom in on those finer details without technological assistance. The beauty of AI is it can process huge quantities of data much faster than humans working independently. A well-trained algorithm might confirm whether a company has a long history of operating sustainably or could uncover some previously unnoticed red flags. 

Everyone involved must agree about the AI’s primary functions, regardless of whether a company’s goals relate to sustainability or other matters. Ironing that out early will make it easier to get executive buy-in and ensure top-down support for the technology from the beginning. 

Seeing how similar companies and industries have used AI in procurement could provide some necessary inspiration. For example, a hospital will have different procurement processes than a government agency.

Assess How Using AI Could Boost Resilience 

COVID-19 and numerous other factors have made supply chains far less stable than they once were. There’s no easy fix for that challenging situation, but AI could reduce some uncertainties. 

For example, people have successfully used supply chain AI tools to improve demand forecasting. Companies are then less likely to run out of the supplies they need or have too many of certain items on hand. 

However, AI could increase resilience in other ways, too. Perhaps a company has previously had issues with counterfeit parts or supplies. Artificial intelligence is excellent at spotting deviations from the norm, picking up on things people can’t. 

One product developed to screen for fake luxury handbags assesses anywhere from 500 to 1,500 features per item. It then gives the results of a check in as quickly as 60 seconds, although it sometimes takes an hour, depending on the brand. The tool also gets smarter with use. 

Even the most sharp-eyed and conscientious people can’t check such minute details so fast. There’s also a high likelihood of individuals getting fatigued and missing out on flaws or fakery. AI is not foolproof but does not get tired or distracted like humans.

These are a couple of the many ways companies can and have depended on AI in procurement to become stronger and less vulnerable to problems. People should set key performance indicators (KPIs) related to the changes they want to make in the organization with the help of AI. That will make it easier to see if the AI is working as expected or needs further tweaking. 

Using AI in Procurement Requires a Careful Strategy

Artificial intelligence-related procurement applications certainly have potential. However, people cannot expect to have AI deployed within their organizations in a matter of weeks. It could take months to figure out the best ways to use the technology and get people accustomed to working with it. That’s K. It’s far better to take care when using AI than to rush the rollout and risk experiencing frequent setbacks.

Author’s Bio

Emily Newton is an industrial journalist. As Editor-in-Chief of Revolutionized, she regularly covers how technology is changing the industry.